Saturday, January 31, 2004
Copyright © Las Vegas Review-Journal

Competition creeps nearer for Atlantic City casinos

Initiatives pending to put slots in Pennsylvania, Maryland

Pedestrians walk the Boardwalk on Thursday in Atlantic City. Gambling initiatives in Pennsylvania and Maryland could place slot machines in two markets from which Atlantic City draws customers. THE ASSOCIATED PRESS

ATLANTIC CITY -- For years, the name of the game here was "Monopoly." Soon, it may be "Survivor."

This East Coast gambling mecca once had the market cornered on slot machines, blackjack tables and roulette parlors. For more than 15 years, it was the equivalent of the only game in town.

Then Connecticut opened two casinos and Delaware installed slot machines at racetracks, chipping away at Atlantic City's core constituency of day-tripping seniors from the Northeast.

Now, the competition may be creeping closer: New initiatives to place slot machines in Pennsylvania and Maryland are threatening the bread and butter of Atlantic City casinos, the $3.3 billion-a-year slot trade.

In neighboring Pennsylvania, Gov. Ed Rendell is proposing 3,000 slot machines at each of the state's eight racetracks and more at four standalone casinos.

In Maryland, Gov. Robert Ehrlich wants permission for 11,500 slot machines at four racetracks and another 4,000 at two undisclosed locations along the Interstate 95 corridor.

If approved, the new casino operations would cut into profits at Atlantic City's 12 casinos, which have 42,357 slot machines and last year won $4.5 billion from gamblers.

From a competition standpoint, the biggest threat to Atlantic City is Pennsylvania, where Rendell wants gambling revenue to help ease property tax burdens. He is working up a bill aimed at passing the Legislature by the end of February.

About 25 percent of the 6.8 million people who rode into Atlantic City on casino-bound buses last year did so from Pennsylvania locations, according to the South Jersey Transportation Authority, which tracks casino bus traffic.

Slots in Maryland would be less of a threat. Last year, only 225,767 of Atlantic City casinos' bus customers came from Maryland destinations, according to the authority.

Too, approval isn't a sure bet. Maryland Senate President Thomas Mike Miller has said the Senate will pass Ehrlich's slots bill. But House Speaker Michael Busch remains opposed to slots and it's uncertain what will happen when the legislation reaches his chamber.

"In the broadest sense, Atlantic City reaches one of six adults who live within a reasonable driving distance," said Michael Pollock, publisher of Michael Pollock's Gaming Industry Observer, a newsletter. "So there's a lot to go around."

However, he said, it will require additional significant capital investment from the public and private sectors for Atlantic City to stay competitive.

Some companies who operate in Atlantic City are already hedging their bets.

Las Vegas-based Caesars Entertainment controls a 32-acre Delaware River waterfront parcel in Philadelphia that would likely be developed as a casino if Rendell's plan is approved.

Caesars spokesman Robert Stewart said his company is interested in doing business in Pennsylvania, once the state decides what it wants.

As for Atlantic City, he said the increased competition would force casino operators to diversify their product to keep the gamblers coming.

"The answer for Atlantic City is not to throw up a wall and dig a moat and pull up the bridge," Stewart said. "It's to create a better and different product."

In Maryland, racetrack owners have lobbied hard to include slot machines at four tracks. Now, Ehrlich wants casinos elsewhere also. Slot parlors could go in any one of five counties that sit along the heavily traveled I-95 corridor, he said.